Financial Planning – Annuity

Tax Deductions and Credits that are often missed

Lina O'Nill — Sat, 21 Jan 2017 14:31:18 +0000

Tax filing season for calendar 2016 opened on January 20, 2017. Here is a list of tax deductions and credits that are often missed by taxpayers because they were not aware that the expenses qualified for a tax deduction or credit.

Medical Related

(Total expenses must exceed 10% (7.5% if age 65+) of Adjusted Gross Income to be deductible)

Alcoholism and drug abuse treatment
Contact lenses, eyeglasses and hearing aids
Long-term care insurance premiums
Medical transportation costs, including the standard mileage rate of 23 ½ cents
Lodging expenses incurred for medical reasons

Employment Related

Costs of looking for a new job in your present occupation
IRA deduction for contributions made after the end of 2014 but before April 15, 2015
Employee’s moving expenses
Education that is work related
Unreimbursed employee expenses, such as license fees, business subscriptions
Health care insurance premiums and 50% of self-employment tax for self-employed
Medicare premiums paid by the self-employed
Simplified Employee Pension (SEP) IRAs for self-employed

How a Little Planning can go a Long Way

Steve Garcia — Sat, 22 Oct 2016 13:51:04 +0000

What types of options do I have when it comes to saving for my children's college education, which is best and why?

While the cost of college continues to increase at a torrid pace, there are ways to prepare for one of the biggest expenditures in your lifetime. With appropriate planning, disciplined savings and thoughtful conversations with your child you can significantly improve your chances for success.

Power of Starting Early & Saving Often

Just as the case with any savings goal, the sooner you start and the more disciplined your approach to saving the better off you are. The power of compounding cannot be overstated when looking at an 18 year time horizon. As an example we've created the table below to highlight the power of compounding and the difference in total savings when someone starts saving $1,000, $500 or $250 a month at the birth of their child vs. their 5^th birthday using a tax-deferred vehicle.

Savings Amount	Savings Beginning at Child's Birth	Savings Beginning on Child's 5th Birthday	Difference in Final Account Balance
$1,000 per month	$349,345.16	$219,171.86	+ $130,173.30
$500 per month	$174,672.58	$109,585.93	+ $65,086.65
$250 per month	$87,336.29	$54,792.97	+ $35,543.32

Assuming a 5% annual return you could have approximately $130,000 more in savings when the child turns 18, while only contributing $60,000 extra dollars by starting at birth vs. age 5 (when saving $1,000 per month). As you can see, before worrying about the actual cost or which school your child will attend, the most important action you can take is to simply begin saving sooner than later.

Impact of Inflation on the Cost of Education

Just as the power of compounding can dramatically affect the amount of your savings, so too can inflation affect the cost of a college education. Recent research suggests that college tuition could continue to increase anywhere between 6% – 7% over the next several years. This is nearly three times the current rate of inflation for the majority of consumer products and services.

Balancing the cost of raising a family, saving for your own retirement and saving for your children's college education can be daunting tasks, but all of these should be considered.

Using our Financial Planning software "NaviPlan", we have created the table below to highlight the dramatic impact inflation can have on the cost of secondary education over the next 18 years. Using current tuition figures (room & board included) for a PA resident and a 6% rate of inflation, we were able to highlight the projected cost for the following four well-known schools at different cost levels.

School	Current Annual Cost	Projected Cost in 18 Years
West Chester University	$17,589	$219,627
Penn State University	$28,434	$355,045
Ohio State University	$39,031	$487,366
University of Pennsylvania	$63,526	$793,226

Is Your Financial Advisor On Your Side?

Steve Garcia — Mon, 25 Jan 2016 13:31:34 +0000

Many investors seek help in managing investments, but the quality and type of help they seek can vary dramatically depending on one small little detail — who’s paying your adviser? In turn, that begs the question… is your adviser on your side of the table?

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It’s important to understand the nature of the relationship between you, your adviser, and the investments he/she recommends.

Advisers come in three blanket varieties.

Fiduciary Advisers: These are advisers that work solely on behalf of the client. This means simply that they accept no payment from any investment or investment company. Their only loyalty is to the client.
Brokers: Brokers are simply paid to “broker” a transaction between two parties. They are often paid by both parties to do this. Since they essentially represent both parties in a transaction they actually don’t have any loyalty to one or the other.
Agents: Agents are just the opposite from fiduciary advisers. They work solely on behalf of the institution, such as a bank or insurance company. Their loyalty by definition is to their employer, whose products they must represent. If this person sounds like a salesman, it’s because they are.